ASIAN ROUNDTABLE TASK FORCE ON RELATED PARTY TRANSACTIONS MANILA, PHILIPPINES, 5 6 FEBRUARY 2009

Transcription

1 ASIAN ROUNDTABLE TASK FORCE ON MANILA, PHILIPPINES, 5 6 FEBRUARY 2009 Renaissance Makati City Hotel Manila Esperanza Street Corner Makati Avenue Makati City, 1228 Philippines DRAFT AGENDA Meeting Co-hosted by: Organised In partnership with: the Government of Japan

2 Background and Objectives of the Asian Roundtable Task Force on Related Party Transactions Established in 1999, the Asian Roundtable on Corporate Governance (ARCG) serves as a regional hub for exchanging experiences and advancing the reform agenda on corporate governance. The ARCG gathers the most prominent, active and influential policy makers, practitioners and experts on corporate governance in the region, from OECD countries and relevant international institutions. 1 The overall goal of the ARCG is to assist decision-makers in their efforts to improve corporate governance in the region. The ARCG has examined a number of issues that in 2003 resulted in the White Paper on Corporate Governance in Asia. The White Paper is a consensus document that identifies policy objectives and formulates a practical reform agenda to improve corporate governance in the region, using the OECD Principles on Corporate Governance as a reference. Following broad endorsement of the White Paper, the ARCG decided to focus its work on how to translate policy objectives into practical outcomes. A recent tangible outcome is a Policy Brief on Corporate Governance of Banks (2006) that presents policy options for improvements in this area. Considering the importance of state ownership, the Roundtable set-up in 2006 the Asia Network on Corporate Governance of State-Owned Enterprises to reach the appropriate audience and to address the specific policy challenges ahead using the OECD Guidelines on Corporate Governance of State-Owned Enterprises as a reference. In 2007, the Roundtable developed some important comparative publications on key issues, such as Enforcement of Corporate Governance in Asia: the Unfinished Agenda and Asia: Overview of Corporate Governance Frameworks. In 2008, the Roundtable will develop in-depth work on monitoring and controlling abusive related party transactions. Guidance for moderators, rapporteurs, speakers and participants Moderators are invited to encourage open discussion among all participants and help maintain the focus on the questions presented in their respective sessions. The objective is to stimulate reflection, encourage the exchange of views and experience on these complex issues among all participants. Ultimately, we need to come up with concrete conclusions. The rapporteurs are expected to take notes and write a summary of the key outcomes of their respective sessions. They are also welcome to contribute to the discussion itself, when appropriate. Introductory comments by speakers should be about 20 minutes and help frame the discussion with illustrations from their own country experience with references to specific policies/practices/behavior/cases, when possible. If you choose to use power point, participants are asked to limit the use of slides to a maximum of 10. Participants might also circulate descriptive documentation in advance, upon agreement. All participants are invited to react, expose their views and discuss the issues raised by speakers. 1 The participating Asian economies include: Bangladesh, China, Hong Kong China, India, Indonesia, Korea, Malaysia, Pakistan, the Philippines, Singapore, Chinese Taipei, Thailand and Vietnam.

3 Thursday, 05 February :30 Registration of participants 09:00 Welcoming remarks Mr. Nestor Espenilla Jr., Deputy Governor of the Central Bank of the Philippines 09:30 Introduction: what is the context? Moderator: Mr. JJ Moreno, Philippines Stock Exchange Overview, objective and scope of the meeting by Ms. Fianna Jesover, Senior Policy Analyst, OECD Highlights of key issues, from perspective of the European Union and the French experience by Mr. Patrice Aguesse, Direction de la Régulation et des Affaires Internationales, Autorité des marchés financiers (AMF) Definitions: what does related parties, related party transactions, control, and materiality mean in Asia? What are the thresholds for disclosure and the decisionmaking process? By Ms. Jennifer Lee, Associate Director, Corporate Finance, Securities and Futures Commission, Hong Kong 10:15 Session 1: Public disclosure - Is sunshine sufficient? Moderator: Professor Stephen Cheung, Chair, Professor of Finance, Department of Economics and Finance, City University of Hong Kong, China Rapporteur: Mr. Arif Baharudin, Head Accounting & Disclosure Standard Bureau, Indonesian Capital Market and Financial Institutions Supervisory Agency Introduction by: Mr. Lixin Zhao, Deputy Director General of the Department of Listed Company Supervision, China Securities Regulatory Commission (CSRC),China How to ensure accurate disclosure of related parties and their transactions?

4 How to evaluate the costs and benefits of disclosure requirements? Who checks? How can the auditor s effectiveness be improved? And the Board s audit committee? And external bodies, such as regulators? Timing and method of disclosure? 11:15 Coffee/Tea Break 11:30 Session 2: Decision-making process: Responsibility of the Board Moderator: Mr. Leo Goldschmidt, Director, European Corporate Governance Institute (ECGI) Belgium Rapporteur: Dr Piman Limpaphayom, Assistant Director - Academic Development Sasin Graduate Institute of Business Administration of Chulalongkorn University Introduction by Dr. Sidharta Utama, Chairman, Indonesian Institute for Corporate Directorship Which RPTs are to be prohibited or monitored with particular vigilance? What is the main role of independent directors? Is there a record of independent directors in Asia? Would it work or is it false hope? Would a stronger role of independent directors, with higher remuneration, create an incentive or a problem? How to ensure independent judgment during the decision-making process? 12:30 Lunch 14:00 Session 3: Decision-making process: Role of the Shareholders Meeting Moderator: Mr. Hasung Jang, Dean and Professor of Finance Korea University, Business School, Korea Rapporteur: Mr. Kenji Hoki, Outreach Advisor, OECD Introduction by Mr. Lee Kha Loon, Head, Chartered Financial Analyst Institute for Financial Market Integrity, Asia Pacific What information should be provided to shareholders and how can the fairness of this information be ensured? How to ensure that only disinterested shareholders vote? Can shareholders exercise their power of discovery?

5 15:00 Session 4: Fiduciary duties: A precondition for enforcement Moderator: Mr. Charles Travis Canfield, Senior Corporate Governance Officer, International Finance Corporation Rapporteur: Professor Stephen Cheung, Chair, Professor of Finance, Department of Economics and Finance, City University of Hong Kong, China Introduction by Mr. Weidong Zhang, Senior Research Fellow, Research Centre, Shanghai Stock Exchange, China How to enhance, in practical terms, understanding of fiduciary duties? How should intra-group transactions be handled? Should some be exempt? How can the cost and length of court cases be minimised? What role can Alternative Dispute Resolution play? What is the experience to-date? 16:00 Coffee/Tea Break 16:30 Session 5: Enhancing enforcement and implementation Moderator: Mr. Héctor Lehuedé, Advisor to the Minister, Ministry of Finance of Chile Introduction by Mr. Anil Joshi HARI CHAND, Securities Commission Malaysia What are the implications for regulators and policy-makers? What should they be doing? How can resources be more effectively channelled to allow them to properly enforce? What penalties or sanctions should be implemented? How can the legal and regulatory framework on RPTs be harmonised? How can regulatory impact assessments be used most effectively to assist this process, to get the costs and benefits right? How can the relevant institutions work more effectively together, sharing responsibilities, to improve enforcement? 18:00 End of Session 19:00 Dinner

6 Friday, 06 February :30 Session 6: Proposed policy recommendations for the Practical Guide to Monitoring RPT s Moderator: Ms. Fianna Jesover, Senior Policy Analyst, OECD Comments by Mr. David Smith, Director, RiskMetrics Group, Singapore Rapporteur : Mrs. Selvarany Rasiah, Chief Regulatory Officer, Bursa Malaysia Bhd The concepts of control and threshold should be introduced in the definition of related parties to capture abusive RPTs and to reduce the regulatory burden. The concepts of materiality and threshold should be introduced in the definition of related party transactions to capture abusive RPTs and to reduce the regulatory burden. The legal/regulatory definition covering related parties and related party transactions should be harmonised in each jurisdiction in order to facilitate implementation and enforcement. The auditor, as verifier of material information, should be sceptical of material nonrelated party transaction. The legal/regulatory framework should support this role. RPTs causing material conflicts of interest for directors should go through an effective system of checks and balances as well as a disclosure process. The company should develop and make public a policy to monitor related party transactions, including the possibility for non controlling shareholders to review the independence of directors in a timely manner. Independent directors should play a central role to monitor RPTs such as designing approval procedures for RPTs. Independent, conducting investigations, and allowing for the possibility of obtaining advice from independent experts. Their role should be supported by the legal/regulatory framework. A voting system should be established with a majority of disinterested shareholders for the approval of RPTs. Independent judgement on the election and removal of independent directors should be ensured. The legal/regulatory framework should ensure that legal action, including specialized courts and alternative dispute resolution, does not prohibit minority shareholders from seeking legal redress quickly and cost-effectively. Disclosure requirements for RPTs should be determined based on a regulatory impact assessment (RIA), weighing the costs and benefits. The Asian Roundtable can develop a concept paper and procedure for use by Asian jurisdictions. A unified regulatory system dealing with related party transactions should be established in each jurisdiction in order to facilitate implementation and enforcement efforts

7 11:30 Coffee/Tea Break 12:00 Concluding Session Moderator: Dr. Jesus P. Estanislao, Chairman, Institute of Corporate Directors I. Next steps to finalising the Report Introduction by: Ms. Fianna Jesover, Senior Policy Analyst, OECD Finalising the draft, process and timing Discussion of the draft in Manila Roundtable and follow-up by the Task Force Publishing the Report, dissemination II. Brainstorming on the 2009 Agenda of the Asian Roundtable on Corporate Governance Introduction by Mr. Kenji Hoki, Outreach Advisor, OECD Open discussion Closing Remarks: Atty. Francis Ed. Lim, President & CEO, Philippine Stock Exchange Lunch 14:30 End of Seminar